Great Eastern Shipping
Great Eastern Shipping
cmp: Rs 387.05
target price: Rs 460
Enam Securities has initiated coverage on Great Eastern Shipping with an ‘outperformer’ rating as it feels that the company’s net asset value (NAV) ‘could provide an upside surprise going ahead’ as ‘tanker asset prices are expected to improve in FY09’. Due to the hyper-cyclical nature of the shipping industry, the brokerage has used the traditional NAV-based methodology. “At estimated NAV of Rs 541 per share for Q4FY08, the stock is currently trading at 31% discount, which is marginally lower than mid-cycle median of 29% discount,” says the report. Another comforting factor is that most global shipping companies are currently quoting in the range of 22% discount to 15% premium to NAV, it adds. Enam feels that the company’s young fleet profile (11.2 years) and a lower proportion of single hull vessels provides downside protection and deserves a lower discount to NAV, if not valued at par. The target price of Rs 460 is based on a discount of 15% to NAV, at the lower end of the range for its global peers
